Comments on Commissionís Proposal for a Directive on Preventive Restructuring Frameworks and Second Chance for Entrepreneurs: The Third Step to the European Cross-border Insolvency SagaMaria-Thomais Epeoglou, Junior Associate, UCL, London, UK
A. Setting the policy and regulatory context of the Proposal
I. The European cross-border insolvency regime; from the first European Insolvency Regulation to the recent financial crisis
The European Insolvency Regulation (EIR), 'arose like a phoenix'1 out of the ashes of the negotiations for a Bankruptcy Convention. It was adopted on 29 May 2000 and first entered into force on 31 May 2002, having acquired the necessary institutional consensus after a debate that proved to be quite vulnerable to political developments. Ever since it has transformed cross-border insolvency within the European Union ('EU') from a fragmented and unpredictable state of affairs to a recognisable framework for proceedings opened in one of the Member States (MS(s)). It has even been capable of claiming sometimes for an out-of-scope effect.
After almost ten years of implementation Ė and an ensuing inertia regarding cross-border insolvency matters Ė the European Commission (Commission), in accordance with article 46 EIR and following an extensive public consultation, published a Report on the implementation of the EIR. Although the Report highlighted that the EIR is 'largely supported by
stakeholders' and 'is generally regarded as a successful instrument', at the same time it urged for a reappraisal of the cross-border insolvency regime mainly due to persisting disparities between national insolvency laws, which along with contentious areas of interpretation undermined legal certainty.
This initiative has not been a mere bureaucratic exercise of compliance with article 46 EIR; nor was it an isolated review process in an effort to optimise European business environment. It has rather been part of EUís strategy and response to the latest financial turmoil.
Ever since the EIR was brought into effect, the European business landscape has utterly changed. The recent financial crisis stressed out many structural challenges for the European economy. Firstly, it resulted in many Member States dealing with a legacy of high private sector debt. Secondly, the spill-over effects of the crisis, revealed the interdependence between the 27 national economies and urged for stronger fiscal consolidation and discipline. Thirdly, despite the single market ambition, businesses keep facing persisting barriers to cross-border activity mostly due to the lack of a level playing field.